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Capacity grows fast

The international bottle-grade polyester (PET) market started to form in the late 1970s. Although China's bottle-grade PET industry began in the late 1980s, it has developed very fast. In 1990, the production capacity of botlle-grade PET in China was only XX XXX t/a. In 1999, it reached nearly XXX XXX t/a. After 2000, due to the rapid growth of the beverage industry, PET bottles have increasingly widely replaced traditional packaging materials, making bottle-grade PET in short supply. This attracted a large amount of investment, causing the rapid growth of bottle-grade PET capacity. By 2002, the capacity of bottle-grade PET in China reached X.X million t/a, and the country could basically be self-sufficient in this product. By 2010, the capacity reached X.XX million t/a. From 2002 to 2010, its annual growth rate was XX.X% on average, far higher than Asian or global capacity growth. In 2010, the output of bottle-grade PET chips in China was X.X million tons. The capacity expansion of bottle-grade PET is much faster than the market demand growth in China, making the market rapidly leap from the basic supply and demand balance into oversupply and the economic efficiency of producers decrease substantially. Major bottle-grade PET producers in China in 2010 are shown in Table X.

Table X Major bottle-grade PET producers in China in 2010

Producer Capacity (kt/a)

Jiangsu Sanfangxiang Group Co Ltd XXXX

Changzhou Huarun Composite Materials Co Ltd XXX

Sinopee Yizheng Chemical Fiber Co Ltd XXX

Jiangyin Chenggao Packing Material Co Ltd XXX

Zhejiang Hengyi Group Co Ltd XXX

Ningbo SK Zhenbang Chemicals Co Ltd XXX

Zhejiang Wankai New Materials Co Ltd XXX

Far Eastern Industries (Shanghai) Co Ltd XXX

Dragon Special Resin (Xiamen) Co Ltd XXX

Hainan Shengzhiye High-tech Inc XXX

Guangzhou Pan Asia PET Co Ltd XXX

Zhuhai Yuhua PET Co Ltd XXX

Kaiping Chunhui Co Ltd XXX

Wuliangye Group Push Co Ltd XXX

PetroChina Liaoyang Petrochemical Company XXX

Xinjiang Blue Ridge Tunhe Chemical Co Ltd XX

Others XXX

Total XXXX

In terms of production distribution, Jiangsu province, Zhejiang province and Shanghai are key areas for the production of bottle-grade PET chips in China, followed by Guangdong province and Hainan province. As of the end of 2010, the capacity of the five provinces was X.XX million t/a, XX XXX t/a, XXX XXX t/a, XXX XXX t/a and XXX XXX t/a, accounting for XX%, XX%, XX%, X% and X% of the national total, respectively. Their combined capacity reached X.XX million t/a, accounting for XX.X% of the national total.

As they are optimistic about the market prospects of bottle-grade PET, many Chinese companies are now building or expanding bottle-grade PET plants. It is expected that in 2011, the new capacity of bottle-grade PET chips in China may reach X.X million t/a, and the total capacity may exceed X million t/a; and in 2012, the new capacity will reach X.X million t/a, and the total capacity may exceed X million t/a.

Exports are far greater than imports

At present, China's output of bottle-grade PET chips can fully satisfy the domestic demand, and a large amount is also for exports. However, with the commissioning of more than X million t/a additional capacity in the next X to X years, China's bottle-grade PET chip market will fall into oversupply.

Since 2002, China has gradually shifted from a net importer of bottle-grade PET chips into a net exporter and rapidly grown into one of the world's major exporters in a short time. With the increasing oversupply of bottle-grade PET chips, Chinese players gradually focus on oversea markets. Since 2006, the import of some special bottle-grade PET chips has increased in China, but compared with export growth, the import growth is still very slow. At present, the imports of bottle-grade PET chips in China mainly come from Chinese Taiwan province, Korea, Malaysia and Japan.